As a result of uncertainty in BREXIT, German real estate investment became an even more sought-after investment option in Europe. The surge in demand for German residential real estate led to developers submitting more projects for approval. Unfortunately, these submissions were bottlenecked at the various German approving authorities due to limited capacity there.
This has had an unfortunate snowball effect on our investment which has a relatively short 2-year maturity term. The delay in approvals led to a delay in project sales which then resulted in delay in investment exits (i.e. beyond 2-year). The situation is further complicated by the fact that most investors are institutions and they follow strict regulations in their respective countries (e.g. Ireland, Korea, Thailand, UK, Singapore etc.).
We are currently facing pressure from the regulators to comply with the 2-year maturity term, meaning if the German developer is unable to exit the investors, we are to exercise the foreclosure option. Negotiations are currently ongoing between the German developer and his various creditors, we being just one of many.
We expect to have better clarity on the situation in the 1st quarter of 2020.
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